Senate Overhauls Minnesota Sports Betting Bill, but Faces Impending Obstacle

As Minnesota’s push for sports betting gains momentum, the Senate bill finds itself entering a committee that could prove to be a formidable obstacle.

Following substantial revisions by the Senate Taxes Committee to SF 1949, the bill now faces scrutiny in the Senate Finance Committee, chaired by a vocal opponent of gambling expansion.

Chair John Marty of the Senate Finance Committee underscored his reservations about sports betting in an opinion piece published in the Minnesota Star Tribune, labeling it “a risky bet for Minnesota.”

The restriction on in-game wagering was designed to satisfy Marty.

In the previous week, during the Senate Commerce and Consumer Protection Committee session, legislators eliminated in-game wagering from the sports betting bill.

According to sources cited by PlayUSA, this action was taken with the aim of persuading Marty to permit the bill’s advancement through his Senate Finance Committee. Marty, one of two Senate members from the Democrat-Farmer-Labor Party who stand against the legalization of online sports betting in Minnesota, remained unconvinced.

The fact that Marty penned an opinion piece subsequent to this gesture indicates that the amendment failed to sway his stance.

In his article, Marty wrote:

“As chair of the Senate Finance Committee, I don’t see legalized sports betting as a big revenue source for the state. I see the reality we face: huge additional cost to taxpayers to address mental health and addiction problems, especially in young people. If we allow these predatory corporations in, we need rigorous safeguards to protect Minnesota from the consequences. We need major changes in the proposals before they are ready for serious consideration.”

Marty emphasized the need for stringent measures to combat problem gambling and safeguard minors if Minnesota were to embrace sports betting. He stated his commitment to collaborating with colleagues to ensure that any sports betting legislation comprehensively addresses its economic, social, and health ramifications, including the risks of suicide, threats to sports integrity, and athlete safety.

At the very least, it appears that Marty intends to delay the bill’s progress in his committee until necessary revisions are made. With the Minnesota legislative session scheduled until May 20, there is ample time for further deliberation and adjustments.

Changes to Minnesota sports betting enacted during committee deliberations

The prohibition of in-game wagers in Minnesota has garnered no support from the gaming industry, as it’s anticipated to slash revenues by more than half. Following this move, a revised fiscal report projected a decrease in revenue from $40 million to $18 million.

Randy Sampson, CEO of Canterbury Park, expressed skepticism about the sustainability of the ban on in-game wagering, stating, “I don’t think anyone actually believes the in-game wagering ban will stick.”

To offset the anticipated revenue loss from in-game wagers, the Senate Taxes Committee opted to double the tax rate from 10% to 20%. While initially viewed as a compensatory measure, sources suggest that the tax increase may persist regardless of the fate of in-game wagers. This adjustment aims to allocate a larger revenue share to other stakeholders in Minnesota, including charitable gaming enterprises and racetracks.

Additionally, amendments made during Thursday’s session reshaped the distribution of benefits among stakeholders in Minnesota’s online sports betting arena. Charitable gaming emerged as a significant beneficiary, with the committee earmarking 20% of online sports betting tax revenue for these enterprises. This allocation is seen as an attempt to rectify perceived harms inflicted on charitable gaming by previous legislative changes.

Furthermore, promotional credit deductions with a phased-out approach were introduced by Klein. Operators in the Minnesota sports betting sector can deduct 100% of promotional credits for the first three years, with deductions gradually reduced by 25% over the subsequent three years before phasing out entirely.

Racetracks are not in agreement with the modifications.

The Taxes committee adjusted the revenue allocation for Minnesota’s two racetracks.

Instead of granting the tracks 30% of a 10% tax, capped at $3 million after the initial $20 million, the bill now stipulates that tracks receive 5% of an uncapped 20% tax. However, this adjustment is not expected to surpass the previous $3 million cap, even if in-game wagering is reinstated.

“We are regressing,” commented Sampson to PlayUSA.

Furthermore, the amendment allocates a larger portion of the racetrack share to Canterbury Park. Rather than splitting the funds evenly with Running Aces, Canterbury Park would now receive 78% of the share, with Running Aces receiving the remaining 22%.